Many pundits in business have long deliberated on the differences between leadership and management. Leadership, many presume, is about inspiring people. It's about practicing what you preach and setting an example that others will follow on their own volition. Management, on the other hand, is about directing people to accomplish a desired outcome. This involves setting and enforcing guidelines in order to ensure that things get done. Both managers and leaders are needed in business and every great business executive will play both roles. A leader is what we want to be; a manager is often what we must be.
In the mortgage industry, however, being a leader and being a manager aren't so different. With ever-increasing regulations, great leaders in the mortgage industry will by necessity become great managers. A manager in any industry needs to be in control of business operations. However, with as much regulation that falls upon executives, even the leaders in the mortgage industry need to have greater control. In the mortgage industry, if you aren't a great manager, you cannot be a great leader.
In 2013, the difference between a great leader and a mediocre one will be how well those leaders manage the processes in their businesses. A great leader in the mortgage business can no longer merely provide inspiration and guidance for his people; he must also provide control and oversight for his processes. For, as time goes on, employees in the mortgage industry will be more inspired by how well you are able to manage your processes than they will be by anything else. In the mortgage business, great management is inspiring. In the mortgage business, great management is great leadership.
So, let's talk a little about how strengthening your process management will lead you to success in 2013. When you have a full understanding of everything that's going on in your industry, you will earn the respect of your employees and the success of your business. It is now more important than ever to manage processes. It is no longer enough to originate a loan; you have to have the discipline and oversight to see your client through every step of the process.
The Consumer Financial Protection Bureau (CFPB) has just released seven new rules that bear greatly on the manner in which mortgage professionals go about doing businesses. One of the most daunting of these rules is the qualified mortgage, known as the qualified mortgage (QM). Managing change as the QM is implemented is going to be labor-intensive and time consuming. Other critical rules that will require extensive focus and determination include new servicing standards, a rule affecting compensation of loan officers, a provision about high-cost mortgages, a few rules and guidelines on appraisals, and an escrow rule related to impounding accounts and tax insurance. Is that enough for you?
More than ever, leaders need to take a hands-on approach to business. Leaders will need to know the new regulations in and out, as well as take a deliberate role in implementing them in their businesses. Nothing is going to change until you take the initiative to change it. Your employees will be looking to you to guide them in this time of increasing regulation. You will have to be out in front, navigating the murky waters of compliance. It isn't something you can delegate. You have to own the process. You have to know what's going on and how to get your team through each step of the transition.
In 2013, you will have to manage your processes in ways that you never thought possible. Are you currently taking a hands-on approach in your business? What systems are you using to make your employees more productive and more profitable?
Process management, as you are probably aware, has two essential components: planning and monitoring. Your success as a leader in 2013 will depend almost entirely on how well you fulfill these two functions. First, you need to become an expert on building a plan. Crafting a strategy to implement the changes in regulations and position yourself for future changes is stage one. How has your planning been in the past? How much time do you spend on the drawing board? Let's talk about how to build a better plan.
The first important part of creating a solid plan is starting with the specifics and working your way outward to the general ideas. The temptation may be to start with your grand vision and iron out the details as you go along. The problem is that you will usually end up missing something important. The devil, as they say, is in the details. Instead, start with the details. Start with the nitty-gritty. Start with the new rules or policies you have to implement and build your way up to a bigger vision.
The second part of creating a solid plan is to be clear about who is responsible for carrying out each part of the plan. Tie each element to specific departments or employees. One of the biggest complaints employees have about their managers is a lack of clarity in their expectations. Don't be that manager. Craft into your strategy precisely who is accountable for every element of your plan. If no one is responsible for it, it doesn't get done.
One final thing to consider in building your plan is that things never go as planned. Always have a back-up plan. Right from the beginning, weave into your strategy alternative options you can take if the situations change. Be flexible and adaptable. As a professional in the mortgage industry, you need those skills more than anyone else.
After you've created a solid plan and have begun to implement it, you must begin to monitor the progress of your plan. If you aren't paying attention to how well your team is carrying out your plan, how will you ever know if it works? After you begin implementing the changes in your business, set up key metrics to monitor from each employee and each department. Generate progress reports to show employees how well they're meeting their expectations. Keep everyone on their toes. Keep everyone moving forward. Own the process. If you don't take control in 2013, you're going to lose it completely.
Now, more than ever in the mortgage business, the philosophy is adapt or die. The Consumer Financial Protection Bureau isn't going away any time soon and it is likely to play a greater role in your business operations as time goes by. After you've developed the perfect plan and extensively monitored its success, everything might just change all over again. You have to be able to roll with the punches and pick right back up developing a new plan to implement new changes in your business.
You aren't becoming a part-time process manager. From here on out, you have to throw yourself wholeheartedly into owning your processes. You have to be in constant process-management mode. You have to be in constant planning, constant monitoring, and constant adapting. If you are to succeed, you've got to change your perspective. You can't lead your business from an ivory tower. You've got to get into the trenches and get your hands dirty. You have to touch everything that happens in your business. That's what process management is all about.
If you're looking to provide greater motivation and inspiration to your team members in 2013, you can do it by playing an active role in guiding your organization through these difficult transitions in regulatory policy. Be on the front lines. Be involved in what is going on. Your employees are not looking for a cheerleader from the sidelines. They're looking for someone who will get in and play the game with them. They're looking for a Quarterback--someone who will call the plays and be there from the snap until the whistle blows. Yes, they're looking for a leader. But, in this regulatory climate, they're looking for a special kind of leader. They're looking for a leader and manager rolled into one. Are you the leader that they are looking for? If not, are you willing to become one?
In 2013, many mortgage bankers will face the threat of failure. For many, the changes will be unbearable. The level of compliance faced in the industry is unprecedented. One really can't blame those who wish to throw in the towel. However, if you're a survivor, if you're a strong leader that is bent on overcoming no matter the odds, there's only one way to stay alive in 2013. Own your processes. If you can excel at managing your processes, no amount of regulation will be too difficult to implement. Your team will see you as someone who is in control and you will be truly unstoppable. Make the decision to become a process manager today.
David Lykken is president of mortgage strategies and managing partner with Mortgage Banking Solutions. He has more than 35 years of industry experience and has garnered a national reputation, and has become a frequent guest on FOX Business News with Neil Cavuto, Stuart Varney, Liz Claman and Dave Asman with additional guest appearances on the CBS Evening News, Bloomberg TV and radio. He may be reached by phone at (512) 977-9900, ext. 10, or e-mail [email protected]
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